On the Hot Seat with Motorola's Fred Wright

Motorola's Fred Wright

On the eve of the CTIA Wireless 2008 conference, editor-in-chief Sue Marek talked with Fred Wright, senior vice president, cellular networks & WiMAX, home & networks mobility at Motorola about LTE vs. WiMAX, the 700 MHz auction and what he believes is meant by the phrase 'open networks.' Wright is one of the many executives who will be participating in FierceMarkets "Path to 4G" event on April 2 at the CTIA Wireless show. Here's the link to the full agenda.

FierceWireless: Why do you think WiMAX and LTE are being positioned as competitive technologies in the 4G debate?

Wright: I think both technologies are designed to provide a similar broadband wireless solution. If we really go back in time, 2G went into three different directions. There was a TDMA technology called IS 136, there was GSM and there was CDMA, which was originally S-95A and B. Then along came 3G. There are two technologies in the global market: UMTS/HSPA and the other is EVDO Rev. A. As we look at global wireless technologies there is a long history around different industry groups developing technical specifications and developing standards for technologies that are designed for a specific solution. In the case of 2G it was all about voice. For 3G it was all about data but voice was a component so you can't forget about voice.

With WiMAX and LTE we again have a case of two different standards groups. IEEE invented WiFi and then came up with WiFi on steroids and developed a full mobility broadband wireless solution called WiMAX 802.16e. It's OFDM-based and is designed to operate in a number of frequency bands around the world and has variable channel width. The wider the channel, the more the data throughput you have.

The 3GPP standards group had its own standard, called LTE. It will operate in a number of frequency bands. It is also an OFDM technology and it also has variable channel width. Both WiMAX and LTE will come in TDD (time division duplex) and FDD (frequency division duplex).

They are similar but they are different. Each standards group saw the fundamental benefits of using an OFDM technology because OFDM gives you the greatest amount of data throughput per megahertz of spectrum. What we find is that the many of the attributes of these two technologies in terms of their performance potential are very similar. If you had an LTE channel that was 10 MHz wide and a WiMAX channel that is 10 MHz wide you will see similar uplink performance and similar downlink performance. It's like religion. You have different camps of technologists and standards groups.

In Barcelona [at the Mobile World Congress conference] Vodafone CEO Arun Sarin made an appeal to the industry about merging these two standards together that created a lot of discussion. Clearly over a long period of time, it's possible that these two technologies could come together in a long-term evolved standard. Maybe the NGMN (next-generation mobile network) Group will decide that the right answer for the industry worldwide is a convergence of these two types of technologies. I don't know.

Neither one of them are 4G, by the way. 4G has not been defined yet.

FierceWireless: Yes, but there seems to be a debate about the 4G issue as well. I've written that 4G hasn't been defined yet but some industry analysts have called me about that statement and said that if the operators are calling it 4G, it will become 4G.

Wright: It's our loose nomenclature that we use-everyone uses it. We commonly call it 4G. The 3GPP calls it a 3.9G technology because the ultimate definition of what is 4G hasn't been determined yet by the ITU. It's not definitive yet. But 4G has attached to it a goal of having a technology that works in a 100 MHz wide channel. These technologies operate in significantly broader channels than anything that exists today.

FierceWireless: Do you think Qualcomm's UMB technology has a chance?

Wright: I don't think that technology will go anywhere. WiMAX has too much global momentum right now. There are many deals around the world. We have 19 contracts. There is huge momentum around WiMAX in the global market. There is also huge support from LTE particularly from the existing wireless carriers, which are dominated by GSM and UMTS operators. The natural inclination, if you are a GSM carrier, is to follow the natural migration path for that technology track which is going to be LTE. I see those two camps. You have carriers like Verizon that have declared they are going down the LTE path. Alltel will follow the same path as Verizon. Sprint is going the WiMAX path and I believe KDDI is the next pivotal customer. It's our belief that they will decide on LTE. I think that ultimately UMB will not make it, except in niche applications that may show up around the world. The question is, will it be enough volume and scale to attract companies to build infrastructure equipment?

FierceWireless: One of the criticisms I've heard about 4G is that carriers shouldn't be thinking about upgrading to WiMAX or LTE when 3G still has such a low penetration rate. How do you respond to those types of comments?

Wright: UMTS got off to a slow start in the global market. It took a long time to commercialize the technology to get it to where it works. It took a long time for 3G handsets to get to the point where they were competitive with 2G-type phones. That clearly comes from volume and scale. It's a chicken and egg scenario. It takes time to deploy these technologies and someone ultimately has to pay the higher price for devices. Once you get the volume, you see the prices come down to volume and scale economies. That is natural with any consumer electronics device.

It took a long time to develop this momentum behind UMTS. In the meantime, along comes WiMAX. WiMAX is a competitive threat to the types of services offered with HSPA so that caused a push within the 3GPP standards group to finalize the specifications on LTE.

You have carriers like Verizon declaring they will rollout LTE in late 2009 and 2010. WiMAX has caused the date to be pulled in for LTE. If you are a GSM operator and you see that LTE is on the horizon and only a couple years away, you wonder if you want to deploy a 3G technology now or wait until 4G because 4G is going to be much better with data throughput. It promises lower costs too. Why not wait?

In the case of GSM we see carriers pushing us to develop E-Edge, which gives you faster data capability and it is a bridging strategy. It allows them to buy time until the next generation of technology. We see many operators jumping over 3G and going right to 4G.

China hasn't even authorized 3G technology to be built. There is no UMTS in China. There is no DO, Rev. A in China. It will be interesting to see what China's decision will be from the government. Will they bypass 3G and go to 4G? That's a good question.

FierceWireless: Have you learned anything from the LTE lab demonstrations?

Wright: About 75 percent of the software and hardware that we developed for WiMAX is usable in LTE. It's so similar. Our demonstration product is basically modified WiMAX gear. We have different application software in the base station control unit. We have changed the over the air signaling protocol and we have an LTE product.

I don't want to over-trivialize it, but the technology used in LTE is very similar to WiMAX.

FierceWireless: Now that we know the winners in the 700 MHz auction, do you think WiMAX will be used in that spectrum?

Wright: My bet is that the most prevalent technology will be LTE. Verizon spent $9 billion on the spectrum. They will go down the LTE path. AT&T has declared it is using LTE. The two big winners in the 700 MHz have declared they will go down the LTE path. Everybody else is smaller regional players. They will be followers, not leaders. They will hop on the same bandwagon as the big guys.

If you are a smaller regional winner you can't go to a supplier and expect them to build a one-off solution in the 700 MHz. And even if they would build base stations or whatever in 700 MHz, who is going to build devices? Will LG, Nokia and others be willing to build those devices? You need volume and scale. Those device makers will focus on meeting the requirements of the big boys like Verizon and AT&T.

WiMAX in the 700 MHz band would have to be an FDD version of WiMAX. The spectrum is split as FDD-type spectrum. You will not want to spend hundreds of millions buying spectrum and leave half of it unused because you used a TDD technology. Do I want to do FDD WiMAX? Who will build the infrastructure? And will I get enough devices to be competitive with these other guys who are going down the LTE path?

FierceWireless: 4G seems to now be associated with open networks because of some statements from operators. Do you think these two things go together?

Wright: I think the whole concept of open network is a philosophical business position that operators simply need to take. Verizon issued a press release a few days ago that said they were opening up their CDMA network to allow device manufacturers to build products that will work on their CDMA network to not have to sell those through a Verizon distributor. They have made a philosophical decision. If devices are manufactured by a company that builds products and operates within the standards associated with their CDMA 1x and DO Rev. A technology and those can be certified to not cause problems with their network, then go for it. If those devices are sold and the customers want to sign up on the Verizon network they will allow them on the network.

The fundamental issue is that in today's market most cell phones are subsidized by the operator. They are all sold at a price that is below the manufacturing cost because carriers subsidize the sale. The carrier controls the distribution channel for devices. They pay the commissions and those are used for incentives to buy down the costs of the device.

You can have a really cool cell phone that you buy at Best Buy but you will pay for it. You walk into Best Buy and see devices from Motorola, LG or Samsung selling for $49 or $99 and then you have one that is more expensive but it can be used on Sprint or Alltel o r Verizon's network. Will customers pay for that device? It will have to be very compelling. It's going to have to be like an iPhone to get customers so excited to pay more for it.